Govt Plans to Raise Surcharge-Free Limit for Wealth

The government is contemplating classifying tax exemptions as subsidies, a move that has drawn skepticism from economists and policy analysts. Sources at the National Board of Revenue reveal that the government's estimated direct tax expenditure in the upcoming fiscal year (FY24) could reach Tk1.78 lakh crore, while direct government subsidies might stand at Tk1.10 lakh crore. By categorizing tax exemptions as subsidies, the total subsidy amount would reach Tk2.90 lakh crore in the next fiscal year.

The upcoming budget for FY2023-24 is expected to include significant proposals aimed at boosting tax revenue, expanding the tax net, and reducing income disparity. Finance Minister AHM Mustafa Kamal is likely to propose raising the tax-free income limit for various categories. The limit may be increased to Tk 3.5 lakh for general individuals, Tk 4 lakh for females and senior citizens, and Tk 4.75 lakh for physically challenged individuals.

The National Board of Revenue (NBR) in Bangladesh faces the challenge of earning 16% more revenue in the next fiscal year to support a Tk7.6 lakh crore annual budget. Revenue growth turned negative in April for the second time since the pandemic, with a 2.29% decline compared to the previous year. Factors such as lower imports, income tax, and travel tax contributed to the shortfall, despite a 15% increase in value-added tax (VAT) collection.

The Bangladeshi government is planning to withdraw the tax-free interest payment facility on foreign borrowings and make it mandatory to deduct tax at source (TDS) at 20% on inter-company loan interest. The government also plans to ensure compliance with double tax avoidance agreements (DTAA). The draft income tax law 2023, which will be placed in parliament on 4 June, plans to impose a tax on other incomes, which will not be set off against core business losses.

The National Board of Revenue (NBR) in Bangladesh is set to introduce tax return preparers (TRPs) who will be allowed to prepare and submit tax returns with incentives starting from July 1. TRPs will receive incentives based on the amount of tax collected, ranging from 10% for minimum tax to 0.5% for the remaining amount. These incentives will be applicable for the first five tax years to encourage start-up taxpayers.

In a remarkable milestone, Bangladesh surpassed 30 lakh tax returns filed in the fiscal year 2022-23, marking the first time this threshold has been crossed. This achievement can be attributed to the National Board of Revenue's (NBR) proactive efforts to expand the tax net through policy measures and increased taxpayer awareness. By April of this fiscal year, the NBR received 31.7 lakh tax returns, representing a substantial 22% growth compared to the previous fiscal year.